The outsourcing giant tells an RBC Capital Markets audience that emerging players from India may not have what it takes to manage North American data centres. Plus: CGI

EDS exec:

EDS isn’t sweating the competition from India, but one of its senior executives on Tuesday took a shot at what she said was their lack of experience with North American IT infrastructure.

Speaking at the RBC Capital Markets North American Technology Conference in San Francisco, EDS vice-president of enterprise service management Kim Stevenson dismissed emerging outsourcing players as focusing on “catch-and-dispatch” approaches, where outsourcers tell customers a problem exists and then leave them to resolve it.

“Tier 1” players such as EDS and IBM, she said, will do more to solve problems.

“The Indian players, Tata and InfoSys, come from a strong application development background. They really have little to no experience in infrastructure management,” Stevenson said, adding that in terms of their potential customers, “it will not be the large companies, and it will not be a company whose business is dependent upon IT.”

Stevenson’s presentation, which was posted online, included slides showing a 72 per cent drop in customer outage incidents during the second quarter of this year compared to last year. While it would be better not to show any outages at all, Stevenson admitted, she said a company like EDS could show clients whether an outage had an impact on the customers. This could include whether a car could be taken off the line at an automaker or whether a bank customer could complete a mortgage application.

“I don’t see the emerging players even having an understanding of that yet,” she said. “Experience matters – and if you’ve never been in a data centre, please don’t tell me that’s who you’re going to put on my critical business processes.”

EDS is appealing to investors at a time when Toronto-based IDC Canada is showing a drop in satisfaction ratings with outsourcing contracts from 50 per cent in 2004 to 33 per cent.

The company is focusing more of its efforts on becoming what Stevenson called a service integrator – helping customers integrate the various pieces of their IT and offering greater visibility around overall system performance.

“The most common cause of large production failures is failed application changes. Replicating an absolutely mirrored image of your production environment is damn near impossible,” Stevenson said, adding that EDS is creating virtual modelling environments that will allow its staff to see the impact of a change before it is made.

Michael Keating, business unit manager for Montreal-based CGI, said the company is seeing almost a 50/50 split between the amount of traditional systems integration work and outsourcing or consulting business it is doing.

“That’s a balance I expect to keep,” he told the RBC Capital Markets conference later that day. “It really allows for maximum penetration for all the services that we have.”

CGI is focused on trying to double the size of its organization within the next three years, which means “rebalancing” its presence in Canada and the United States, Keating said.

“This does not mean in any way that we intend to shrink the size of the Canadian business,” he said. “Canada is still growing.”

While EDS has a substantial Canadian presence, Stevenson focused on its more global reach, noting that 19 per cent of its IT infrastructure workforce is now based in low-cost jurisdictions such as Hungary and Brazil.

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